Severance Agreement Explained | Weisberg Cummings, P.C.

What Is a Severance Agreement?

The legal document known as a severance agreement is one that covers all of the rights and responsibilities of both the employer and the employee. In the severance agreement, all of the benefits the company offers will be laid out, such as pay and insurance. The agreement also functions to ensure that the employee is not wrongfully terminated. A severance agreement can also be used by a business to address non-compete issues.

Coupled with severance pay, a severance agreement is intended to ensure that the employee agrees to the terms under which he or she is terminated. The employee agrees that he or she understands how benefits like insurance and pay will change upon leaving the company.

So, can you sue if you signed a severance agreement? Through the severance agreement, you will typically agree not to file a lawsuit for being wrongfully terminated.

Your employer will likely provide you with severance pay in return for signing the agreement. This pay is intended to make the transition easier for you, as you will have an income during a period of time while you search for another job.

Ideally, a severance agreement can resolve real and potential problems between employees and employers during the separation time. If your employer asks you to sign this agreement, you will likely find that the agreement contains a waiver and release clause. This states that you relinquish your rights against the company. An experienced lawyer can review your agreement and determine whether your employer is asking you to waive significant benefits or rights based on your experience with the company.

What to Consider When Negotiating a Severance Agreement

When you face a severance agreement, it can be helpful to know what you can and cannot ask for during employee separation agreement negotiation. Negotiations cover much more than your final paycheck. Consider the following when negotiating a severance agreement:

Consider the Possible Financial Outcomes

For a top executive, an employment contract typically lists the terms of severance. For other employees, the terms may not be so clear. This is where informal guidelines can help. For severance packages, the rule of thumb of one to two weeks’ pay for each year you were employed tends to be the average.

Be Aware of What Both You and Your Employer Want

Unless you are covered by a contract, you can be fired by your employer without a set reason in most states without severance pay. When you were hired, your employer may have even had you sign a document to confirm this point. An employer may choose to have you sign a severance agreement to limit the number of legal issues they could face down the road. A severance agreement means less hassle for the company now and fewer future costs for legal counsel.

Because the severance agreement provides so many benefits for the employer, this may give you some leverage to negotiate terms in your favor.

Utilize Your Relationships

Your relationships can impact your severance agreement negotiations. If you have a close relationship with your boss or other supervisors, this could help you when you are haggling severance terms. You may be able to negotiate for more pay or better terms if your boss has enjoyed working with you.

Know the Factors That Affect the Amount You Will Receive

What factors will affect how much you can get for severance? While some circumstances may be out of your control, you may have some control over the amount you will receive. The following factors may affect the amount you will receive for severance pay:

How well you performed in your position: How positive are your work evaluations? How popular are you with your boss? The better your evaluations are, the more likely you will be to receive a greater amount of severance pay.
How well your employer tracked your performance: If your work performance evaluations are unclear or indicate good work, you may have some leverage if you were fired for a reason related to your performance.
The cause of your dismissal: If you are fired because your employer is dissatisfied with your job performance, this may negatively impact the amount of severance you will receive. On the other hand, if your company was forced to layoff employees after a merger, then the amount you receive may be more generous. Your employer may also be more generous with the severance amount if they are concerned that you may have a viable claim against them for wrongful termination.

Enforceability of Severance Agreements

How enforceable are severance agreements? Typically, a severance agreement is enforceable in the following circumstances:

The agreement does not violate any laws.
The employee knowingly and voluntarily signed the agreement.
The agreement is reasonable in its terms when waiving an employee’s right to sue.
The employee was allowed a reasonable amount of time to contact a lawyer to discuss the agreement.

To receive severance pay in PA, you will likely be required to sign an agreement. However, an employer cannot force you to sign a severance agreement or coerce you by threatening to withhold pay you have already earned.

Unfortunately, employees often sign a severance agreement to receive the pay without fully understanding what rights they are waiving. To avoid any problems with enforceability, an employer must give an employee time to consult a lawyer. When presented with a severance agreement, you may want to contact a qualified employment lawyer as soon as possible to discuss the terms of the agreement, especially since the first agreement may not be your employer’s best offer.

Review Your Severance Agreement With Weisberg Cummings, P.C.

Our contract dispute lawyers at Weisberg Cummings, P.C. can help you review your severance agreement and provide you with skilled counsel on negotiating your agreement. For clients who appear to have a potential retaliation or discrimination claim, our legal team will work to recover the value of any legal claims you may have from the severance package. These claims can be reflected in a negotiated agreement in the duration of your continued health insurance coverage, the amount of severance pay you receive and your employer’s waiver of non-solicitation or non-compete terms.

Our severance package attorneys can review, negotiate and enforce severance agreement terms in several scenarios, such as after a key executive or professional employee leaves after the sale of a business, during layoffs caused by structural changes or downsizing at a major employer in Pennsylvania or during the resolution of employer retaliation or sexual harassment complaints.

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At Weisberg Cummings, P.C., we are the professionals you can turn to when you or a loved one has been wronged by another employee or an employer. With more than 40 years of experience in law combined, our severance attorneys will stand up for your legal rights.

We strive to provide our clients with personal service. When you choose us to represent you, we will devote time to getting to know you and your situation as well as possible.

Our lawyers at Weisberg Cummings, P.C. have successfully resolved workplace disputes for many clients through severance agreement negotiations. We can provide you with reliable advice about improvements that can be made to a pending severance offer and let you know how we utilize severance in our broader strategy for employment litigation. For a free consultation with a severance lawyer, contact us at our office in Harrisburg today.

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Negotiating Severance Agreements